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🍔 Dropshipping With a Twist

🍔 Dropshipping With a Twist

Brainstorms Issue #26

April 22, 2021

Brainstorms Issue #26

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Dropshipping Food

In Dec. of 2020 Mr. Beast, a YouTuber with over 60M subscribers, launched one of his most ambitious, and frankly weird, ventures to date - Mr. Beast Burger.

This wasn’t a typical launch either - seemingly overnight, Mr. Beast Burger launched in 300 locations.

To open just one restaurant you need physical infrastructure, staff, SOPs, training, etc…

But 300? That’s a different challenge entirely.

So, how the hell did he pull it off?

Well, I did some research. If you want more details, here’s a fantastic write-up of the full story, but here are the cliff notes:

Mr. Beast partnered with a company called Virtual Dining Concepts (VDC). Mr. Beast handled the promotion, VDC did everything else. Here’s how it worked:

VDC partners with restaurants across the US that want more online orders
VDC + Mr. Beast created an online-only restaurant (Mr. Beast Burgers) that leverages these restaurant’s infrastructure
VDC sends the partnered restaurants a special tablet that lights up whenever an order for Mr. Beast Burgers comes through
The restaurant cooks up the order and places it in Mr. Beast branded packaging (provided by VDC)

Here’s an estimation of how the economics break down:

Source: https://www.shaanpuri.com/posts/cloud-kitchens

When I learned this, I came to a simple realization.

Mr. Beast was just dropshipping fast food.

If you’re unfamiliar with dropshipping, firstly, where have you been the last 5 years? Secondly, it’s one of the quickest and cheapest ways to launch a physical product.

Here’s a quick visual the walks through how dropshipping works 👇

The reason why dropshipping is so popular is that platforms like AliExpress and Oberlo have made it incredibly easy for novices to get up and running.

Both Aliexpress and Oberlo help connect manufacturers that make great physical products with the companies that want to private label those products and market them.

It’s a win-win. The marketers don’t need to worry about all the product stuff, and the product people don’t need to worry about the marketing stuff.

So here’s the opportunity...

This concept could also work for consumer packaged goods (CPG) food brands.

Creating a food product from scratch is difficult - much like how it’s difficult to start a restaurant from scratch or launch a physical product from scratch.

Here’s the idea - on one side, you’ve got private label food manufacturers like Rocky Mountain Food Factory, CIC , Duke Foods, and dozens more who make quality products like cereal, beef jerky, coffee, etc...

On the other side, you’ve got entrepreneurs who are looking to create companies that sell this food direct-to-consumer, like Magic Spoon, Perky Jerky, and Chamberline Coffee.

Currently, there are little to no companies like VDC, AliExpress, or Oberlo that’s helping connect private label food manufacturers with entrepreneurs who want to market and sell food.

I sometimes talk about smaller opportunities or side-hustle-type ideas, but this is a big problem and a big opportunity.

Note: It’s actually pretty common for manufacturers of food companies to put different brands/labels on the same food.

Let’s map out what needs to happen to make this work:

You need to get food manufacturers on board (this should be pretty easy)
You need to find food entrepreneurs willing to be early adopters (also pretty easy)
Create a process/product that streamlines the process (challenging)

It’s likely that food manufactures will work with you so long as you hit their minimum order quantity (MOQs) requirements. But, hitting those MOQs could be challenging.

To solve that problem, I’d focus on 1 product category to start. I think coffee, beef jerky, or hot sauce is a good place to start. These are all trendy products that with some interesting branding could do well.

Next, I’d look for entrepreneurs who are interested.

Dropshipping is a super hot space right now, and there are loads of communities on Reddit, Facebook, and YouTube that you could leverage.

What you’re looking for are people who have had some success dropshipping, but are looking for unique products that have significantly less competition.

Lastly, you need to create a product that brings both parties together seamlessly.

To be frank, I don’t know exactly what this looks like. But, I do know the best way to find out.

Get a small batch (5) of entrepreneurs to work with one or two manufactures and see where the pain points are. From there, solve those problems and automate where it makes sense.

Thanks for reading - now get out there and build it!

Catch ya next week, Keevin ✌

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